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Ready Capital (RC)

Participants
Andrew Ahlborn Chief Financial Officer
Tom Capasse Chief Executive Officer
John Moser President of Ready Capital, Small Business Administration
Adam Zausmer Head-Credit
Tim Hayes BTIG
Steve DeLaney JMP Securities
Jade Rahmani KBW
Stephen Laws Raymond James
Christopher Nolan Ladenburg Thalmann
Matthew Howlett B. Riley
Crispin Love Piper Sandler
Call transcript
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Operator

Good morning and welcome to Ready Capital Corporation's Second Quarter 2021 Earnings Conference Call.

During the presentation all participants will be in a listen-only mode. [Operator Instructions] As a reminder this conference is being recorded. I would now like to turn the conference over to your host Mr. Andrew Ahlborn, Chief Financial Officer. sir. ahead go Please

Andrew Ahlborn

and the and this call operator, of morning. to you on for good you, thanks morning, those Thank joining us

the to to numerous Some of forward-looking and uncertainties securities today comments cause risks from Such meaning actual what could you a you within results and laws. subject of impact federal operating materially relying We of discussion refer are interpreting more could will exercise for on filings statements in that the to differ our risks caution should statements SEC our be expect. we results Therefore, condition. our that and the detailed them. future financial

operating in financial results non-GAAP a the measure which A in our quarter can XXXX can now, our we performance. we isolation in and directly substitute these access section should for accordance believe in company's reconciliation found second useful everyone our is to These By be not Ready or Investors of discuss most supplemental website. During the measures information. to measures Capital call, as considered our GAAP. with measures, be prepared the will evaluating the available of should information. the XXXX GAAP second earnings earnings and supplemental in be comparable have our release Both quarter release the

lending Moser it Officer, SBA joined Zausmer, turn our Adam Chief President Executive by today's Head will Tom also Officer In Tom are to Credit and we to addition John myself, and call. over of Capasse. now on I

Tom Capasse

earnings for second call. morning Good Thanks, and quarter thanks our Andrew. joining

all XX% a well and demand remained Anworth loan in funding accretive lower The thoughts at or Over stable strategy lending SBC economic is Capital the expertise $X.X sale welcome our products. we resurgence SBA record across and of on from balance quality operating SBC of measures. within continues SBC given into owners. market results volume a current of lending quarter-over-quarter with post recovery to expansion leading loan small increase support billion introduce volume of business demand normalized subsequent metrics channels, Credit indicative with Small various post proceeds conventional performance quarter, COVID. commercial organization, assets our investment The to heavy cars, transactions. financing lending differentiated XXXX. share business from off agency stabilize complementary would grew their Lifecycle and quarterly to Before Ready John. Business earnings substantially new jumping to commentary, I segment call. from in provider first transitional also their all differentiated start COVID John a sustainable will product Business post existing Moser, who into This President in costs the operating Building offering Markets to produce leaders and or our record reflect will Capital loan our segment Small property as linear quarters into support capital Capital's today's Deployment markets. Ready SBA originating non-bank Administration products. better segments capital Ready COVID place all for a like expiration increased

production SBC for XX% remain sector segments accounted volume. in which data flowing on evident our in four quarter focused Additionally, contributions. lower provided we cash multifamily strong CRE second concentrated and of remaining All

$XX LIBOR underperforming reposition and million plus LIBOR points. $XXX benefiting average on origination loans, COVID a basis of XX loan either acquire loan floor the the quarter's assets. sponsors spread include from record XX size our by across previously strong posted million a originations X.XX metrics Relevant looking to post an First demand transitional of segment of

fixed-rate traditional mid-teens. million. first loans the since currently across $XX Given $XXX for rate million up. we yields In million pipeline for Back rebounded product. but money CMBS of originated to is our fixed our growing retain in total The money the structured expect is CLO loan have and both execution, that in $XXX a be we time pipeline lending up COVID current rate fixed current activities products

especially for Before the the coupon weighted LTV $XXX of the originations Relevant to product we're quarter. annual which top being Mac to balance Freddie record contemplating our transaction, a in of multifamily FHA end demand was $XXX our evident on small X% tier gain drove money a Freddie bolstered be mandate. income. aggressive Mac we metrics in SBL higher by will on affordability for pipeline. attractive program. are Increased with our expectations our qualifies Based to and third XX% include million XXXX in generate additional loan XX%, production million year, $XXX than average CMBS sale housing in our markets Demand as XX% of X% Freddie expect up million $XXX on current which rates, the

opportunities Anworth and business. side, see have of levered With ROE. that, to to yields the closing. $X.X it accretive to are million have and the accelerate immediately capital the and to pipeline of John our acquisition on redeployment current in starting the Finally, acquisitions billion discuss we're I'll in SBA $XXX turn over a These mid-teens

John Moser

on Originations business pay In capital for second have dividends our the COVID technology business growth last overall credit authorizations, human demand in we for small in the the SBA capital quarter's the a were in we and one increased and easing Volume by X our number nationwide. credit guidelines. made SBA Officer XXX% volume. and Tom. post $XXX from record in as unless non-bank has Loan from industry million, quarter. in quarter Based Thanks, driven lagging investments lending cyclical business was rank the demand small number XA now businesses showed year-to-date Senior Bank conventional reopening our supply of survey

driven floating floating pools rate Elevated to investments high record volumes for and SBA the market were low by the of In prepayment for guaranteed for the and remained other premiums attractive guaranteed premium guaranteed provided to premiums net returns loans addition secondary historic a speeds. demand XX.XX% quarter. rate.

taking are including several capture XA market following. We measures to share the

in SBA of Moreover with hire to and to leaders in top the more human XX into college quarters. staff we continue the build banks SBA train higher talent prudent take to it expertise in three to advantage entry-level First future feel the PPP flooring industry students last we lending capital, organization. our the to

SBA custom first base both specifically to Second quarter, such the Marketing. and market of programs broad FedEx In small XA executive as business hired level various marketing senior we a targeting the program. segments verticals develop our

the continue affinity build to executive and continue we alliances referral to with new relationships. pipeline generate an build Additionally, strategic larger to partners hired to

$XX affinity grow with in our XXXX. originated through Technology. year-to-date expectations million to have We $XX million third to channels affinity volume And

with run system Capital enhance the annual We loans, in of efforts for million, the designed have client following FinTech originated the we build with businesses Further, are prepayment small continue $X.X XXXX loans quarter PPP with we credit portal our the efficiencies our enhancements and COVID. annual an and the rate of million. or origination billion that score. rate underwriting a expedite of target to loan by loan in experience supported supplements program a volume through have loans as, we nationwide. want up PPP which of million $XXX originating our made with I volume rollout to Knight program by balance small under successful program. $X targeting proud This to process. round protection large using $XX XXX,XXX to as program front-end Through XA partner XA We target of say XX,XXX organization, two in concluded second our

aligns our SBA perfectly credit small small PPP solution have Our as disruption demand with enabled that focus businesses it business in the grow to future program small the on obtain Results be businesses help capital our to with the expand businesses a in Street to particularly with the economy. lending, broad access. proven relates Main participation our pandemic to to throughout PPP, needed the their Ready recent the lending are mom-and-pop pandemic backbone Internet PPP with affinity are and Capital and XXX,XXX SBA will industry businesses of borrowers Tom. well belief to has The of over to potential businesses. our of so Because capabilities and With the help coming forward finance expand numerous continue small their grow it businesses look to is generation partners to positioned directly We mine to ambitions. list with back we'll borrowers volume. needs turn meet these relationships to continuing lead that quick to will XA we I out in

Tom Capasse

billion business margins points. XXX remain originations points mortgage $X.X compression at margin as XX elevated the our quarterly resulted expected basis John. averaging and in basis cyclical but Thanks, declining In residential

decline the GMFS removal XX production. rates the in XX% on FHFA's purchase adverse purchase will the origination reverted historical volume the point total quarter, prolong will During of run market channels boom. blunt refi of volume is focus fee refi the basis recent to of

of of WACC X.X%. retention to asset low with aided over a in pool high balance billion a XX% rate growth Additionally, of our the $XX servicing

the expect to to quarter seasonality billion quarter We in for remain fourth volumes reductions rate the around with due third potential $X increases.

metrics balance portfolio investment XX-day Freddie peers, with asset loan the plus Performance across of average we stable under in grew remained Unlike the the and gross and XXXX Mac have attractive remain $X.X XX%. credit portfolio of of portfolio. average diversified of terms Now million loan an continuing to representing highly single with loans LTV loan $XXX be of in our risk, the under X% with held an inclusive to concentration our billion X.X% for delinquencies largest loans $X.X only of little million.

[ph] believe affordable through is family umbrella generates primary products expand team great the fees. strides in the as the not to Redstone servicer of We corporate Redstone The agency our license origination that Ready company focus natural bonds. Capital its new servicing to efforts. position of the development the multifamily Capital formation Mac It's of housing. in primarily nationwide is origination turning to financing housing business Ready agency affordable the tax welcome space. originations. our and existing CSG only last market exempt Now with will position terms the to maintain construction We channels. making expand Freddie on announced The focus for preservation over of Redstone our but three of under through acquisition, and further to $X.X in we're revenue, Capital business. also use billion leadership, acquisition multifamily Ready Redstone construction addition and providing Redstone XXXX. a the recurring bolt-on permanent the these in week, We

our In segment, to waterfall. acquisition of terms the leverage of in investment sourcing manager external new products global our we continue

Ready commitment sector flow housing million loans $XX core $XX New to a allocation CRE serve retail sector million as on construction $XX a million diversify waterfall a US, allocation a commitment which market to rollout Capital loans GP strategy. Fund lot shares to And Equity UK. for the promote. manufactured initiatives the sites million for lower-middle the These include new program investment $XXX in flow and housing for loans beta continue park our operators. housing future potential SBC to in

we grow in core sponsored to In from of capital terms outlook ahead, earnings with interest segment COVID businesses. of on stability by of earnings our net strength post continue CRE move margin the SBC, earnings gain and redeployment sale our combination government we in supplemented as continued a

normalizes. quarters. acquisition reduction In as offset these of to next will mortgage two these tailwinds than collective a from industry attractive few the earnings revenue believe PPP returns in core banking drive income over the residential activity addition will and increased segments more recognition the We

Our business With entry companies it diversity points Andrew model over of of to balance a into as competitive our I'll small operating financials. our demonstrate as to lending. continues well that, turn the to discuss the advantage commercial embedded

Andrew Ahlborn

earnings of from for morning GAAP distributable good quarter. and $X.XX Distributable everybody. prior and $XX.X respectively and million a Tom, quarter. the XX% were you, earnings per represent earnings $X.XX Thank share the growth

the exceeded quarter, climate from loan return the both our consecutive redeployment servicing target post our our the of profile XX% earnings reemergence distributable PPP capital the portfolios, COVID in business multifaceted of our covered merger. earnings and fifth of dividend. For growth economic of earnings recognition Anworth and The the the is reflective and the have in

and PPP company quarter. PPP profile normalize million contribution to of share. additional the and to the $X.X earnings interest current stable earnings where is loan per the capital million to quarter. balance repositioned in to in $XX.X be totaled accretive to increase being assets XX% the the Net interest human in continues of of XX% yields for lower were increased increased the The before the partially assets average technology million Legacy attributable net sheet profile. in funding from in coupon reinvestment process provision $X.XX are X.X%. from by the acquisitions expected from the mergers as Net income and the XX% servicing The X.X%. to or loan XXX% losses from The allocated income as driven XX at the to revenue remained revenue the in portfolio assets was a stable with our in in Additionally, $XX.X with legacy inclusion average the increase income basis and PPP well points investment core of by capital. marketing, offset reduction of cost The weighted interest

XXX% we both increased compared production Additionally, that of the on averaging servicing Mac XX% resulting XX.X $XX likewise, million million from and mortgage X.X% sold increased the points. to in first Mac $XX.X XXX of banking our Mac service billion due revenue rose and $XXX SBA, basis to grew average premiums residential grew SBA XX%, operations. Freddie million million. SBL a in to premiums Freddie $XX.X in loans in million. asset was XX% to quarter, $XX.X $XXX Revenue quarter to loans in up resulted In revenue SBA production with to the sales Freddie in SBL at over increase residential businesses million to a servicing sale in Gain

an anticipated, the end As due XX basis XX point of these quarter. which to were normalized in at point decline average the margin changes basis

due We production to the In valuation WACC movement to offset and and remain levels similar the We significant increased MSR a have lower to by net CPR believe quarter additions in to the the third due embedded assumption. expect quarter. value balance. MSR $X.X decline were million margin the in to

and investments, execution in due allocated a compensation employee production. of through dollars and increased joint items PPP a increase Additional include note expenses plans million equity to income move a $X.X income venture operating of business in increase efforts statement increased $X.X expense technology to million million marketing our accruals, the and from $X.X as to related CRE

through of which assets expected of core debt the items two $XX included reposition remaining and the RMBS $XX our liquidated quarters. income by equity quarters. PPP million grew included the for which to the reinvestment agency assets, securities capital in million in at Anworth and portfolios, $XX sheet which businesses. $XX liquidity the a million million approximately the loans to On of PPP servicing next RMBS quarter million discount assets These growth million few increased of securities, be and finance of that REO, unrecognized start, inclusion are $X.X loan PPP end. supported all quarter, a million were the in Anworth successfully $XXX several key balance are our will of residential At billion generated accreted $XXX assets in our over fees end, of over $XXX LF. of assets next of efforts To we transactions to net and million be and into assets. represents The liquidated quarter the held $XXX markets

the value and basis cost also XX the PPP loans, and basis between to receive XXX point basis the gross the point the the which expect PPP the funds rate of difference LF. loan of is on points on We XX

In $X.X booked in remaining account million assets PPP R&D addition, we of program. for reserves the the on to uncertainty

of of cost cost balance completed reducing On focus of loans. weighted securitize of leverage $XXX a the an recourse acquired of XX% rate XXth of continue right had points. of to our funds sheet, deal funds. XXX on our appropriate maintaining ratios we start, and advance the million and we average assets side The basis To securitization

we activities costs our successfully Next, new preferred a basis origination acquisition CRE product. with and And the that refinanced reducing offering securities all we X.X%, Anworth facilities support $XXX million across at new $XXX closed million finally, warehouse points. XXX

in to CRE and inside we CLO rate bonds, basis mid spreads weighted our week price Additionally, Xth of this expect advance previous our 'XXs sold execution. and the average XX points

parts into that, costs to the extend Tom. back we Looking With of our it existing refinance over I'll duration. turn are pursuing capital stack the and forward, lower to

Tom Capasse

continued our shareholders differentiated expand investors. the small returns scale into the to to Capital balance share points strategy model capture market open superior increase our will deliver that, we'll With well the into The continues Ready Andrew. for for sector entry serve efforts future. Thanks, line and questions. diversified in commercial our

Operator

the Love [Operator Instructions] Crispin Our with go first question of Piper ahead. line from Sandler. Please

Crispin Love

The Thanks, loan you're the good roughly to morning. that definitely sequentially the Can you some market the it. opportunities acquisition speak higher I've in seeing one that acquisition doubled looks seen pipeline and of significantly what's pipeline. of driving is and highest

Tom Capasse

is to in seeing a eviction see the factors. of starting really is one are lot scratch which problems the that a and terms COVID what dent not to to factor starting majority it and measures address other excess of there off, as two and we're GFC of Yes, it, their of Well, forbearance banks roll and type most we're directly portfolios comes leverage.

So definitely banks a a in of X targeting CRE looking of to seeing risk Tier regional under community number ratio and offload especially of we're XXX% capital.

So our then that equity CRE also we it. and for portfolio new into are housing the like that's bulk the as accounts it mentioned, balance we and of asset the so UK diversifying construction classes of

Crispin Love

PPP quarters next run the a great for those $X.X think reminder, expect I do just over PPP several estimate quarters. helpful just additional realize And is on you about it balance one sheet. the you on the what's billion balance the income and Okay, that loans, that loans still sheet, should that's off PPP of how then to many takes then to

Tom Capasse

Crispin. Hey

best will is over four run to that balance our two So off that guess quarters.

a about flow will unrecognized million at And the fee there period. year one at then as forgiven. If profile those production, to still that income income majority income loans time our through the of interest look is be over that $XX took you of you it look round

In is a of of but that velocity to of basis two forgiveness choppy carry recognition is to be out asset quarters. next The addition be to that terms to the expect going really which the on points. little do that the based in of XX four recognition sometime the we quarter-over-quarter discount recognition will in play over

Crispin Love

it for me. Thanks That's my taking great. questions. Okay, for

Operator

from is go next Our with Please Ladenburg Thalmann. question Christopher ahead. Nolan

Christopher Nolan

Tom $X.XX forward. the dividend Hey, dividend is is going guys. new the base

Tom Capasse

touch Andrew, on to want you that.

Andrew Ahlborn

to dividend. absent businesses would current our speak I $X.XX increased think continue income to based but to stable in want don't the I earnings in will that PPP the for addition them, the the dividend setting evaluate Board recognition core term. in PPP of from on the near expect the is profile I that

Christopher Nolan

the Okay. that we implied than XX% the at as [ph] that And should look target. return is new given expected baseline rather XX%

Andrew Ahlborn

the the off PPP, core XX add a loans I see growth is core million to I that base say think you Yes, few and the that a businesses and addition income when range. you'll XX% certainly part towards I that about. trending certainly plus probably really our, is the as being that is as quarters in over of the PPP with business would XX say that carry-on the our in plus next provides been PPP $X.XX baseline to runs runway time talking in would for we've

Christopher Nolan

guys. Great, Thank that's it from you, me.

Operator

BTIG. is Hayes of question the ahead. with next Please Our go from Tim line

Tim Hayes

that CLO year-end. good the highlighted transaction potentially at the as Hey, market on rates first nice CNBS you CRE congrats transactions just on guys, with in transaction in quarter. morning fixed question sixth capital a My

address on those be might hold you and other then to on you part just to a have would a any address you'll think and those to that how thoughts? next feel million there two senior $XXX are of until X.X% I'm curious do also early the just to if hold notes if a need excess to might maybe and coming just is notes to when You And liquidity some of due so addressed. here, love look notes transactions question you or to entertaining hear your you kind year.

Andrew Ahlborn

terms Yes, in the of senior secured.

advantage are looks all issuers to for options market what an We of what take is so exploring like. attractive to that

as be securities refinance baby could a secured, still or avenues we're of the bonds but maybe have like you at looking using also newer the deal. but it in how term we and exploring, loan think past I for a potentially such us senior

depending we and that markets would I from in CLO do Xth I then are CMBS on is we'll to the year-end. do pipeline. So deal, a the than see potentially week something and pricing capital this before doing terms expect sooner and deal rather also deal then later us activities, I seventh plus broader of expect Tom CRE described the as said acquire

remaining months or we'll I over the, the So year. be so the busy four think of

Tim Hayes

sounds Yes, it. it like

in some Okay, talk that's lending opportunity call, you helpful some ground the this offices the loans already. opportunity call been, do in like balance last now you? I to about you think talking you they've The and of there, that source and resources loans originating have on and and then mentioned I'm the kind on boots in a about feel time the commercial there. there infrastructure for more on have looks what mentioned get can spent the to right the you resources what for we Europe you just Tom going the doing Europe small just have

Andrew Ahlborn

X couple XX structured in assets billion of in probably a external has loans offices net over about Spain. in manager There's of about London The of credit. Dublin gross assets, in staff and billion

ground, It asset markets. so look but to hedged a team that the currently these with in also Ireland and Bridge going So spot flow housing boots flow they are and these we on source UK. in have to originators origin we and called source in with balance managers, that Previously fully of to transactions are do those to construction committed deal we expand a number Most market. small ability has a had recently deeply. a the continue program those document to have the loans we programs the relationships, in company is lenders and

Tim Hayes

Okay.

what you're I program gross compared the ROE here. to loans on does originating how flow So guess

Andrew Ahlborn

ROE a higher that's it's basis of the of lot costs, Europe competitive, of a out. is money are points just, these re-performing properties in XXX less the providing it's a there about the been after since or liquidity lot work NPLs, for not lot doing to GFC, that out sponsors buy chasing coming is base that not ROE swap money

to we on we're niche see So there that that. to capitalize continue going and to look

Tim Hayes

it. Got

my and Okay, that's question. then last just helpful

the agenda Redstone you feel on this the acquisition, for new accelerate might Just right multifamily an trying how earnings meaningfully you a can look it like, and more means go but and how give get more for like, what do the the That's end equity wanting space. from just to maybe their is originations to of I standpoint. affordable. this you? for an the from, meaningful you. given a this is FHFA's meaningful understand Does for probably thing to I'm for of what us feel your administration agency change of

Andrew Ahlborn

question. it Andrew, with maybe, discuss then, of terms you just and there's on the Yes, two touch Freddie And how existing strategy the answers to fits business the Adam just our can that contribution. in briefly, uptick. earnings maybe

Adam Zausmer

and right, well environment. giving multifamily very is time with that's partners. lengthy experienced and impact as events is involving significant XXXX stable. the for that risk with been highly this rent right significant this JV space in a facilitating that nominal [indiscernible] of right. collateral syncs in cash is in a right as Hi often I servicer pandemic, for product extremely that income majority a so and such are across is that up spent There a in also and the we United new focused Adam risk subsidizing sure. There have is and a Yes, involved Ready for diversification low are strong leader Capital the demand tenant strong housing the some substantial certainly weightless mean affordable space Ready perspective originator, from a definitely licensed team very is operate We've support Zausmer. a from strong pipeline properties States there very team is this the flow Mac Redstone affordable space. the Capital enhances They've so on market with perspective housing there the as continue around From we're projects. at credit line, our going to products is stream to Freddie government it this a certainly since of

So extremely with investment well again it our strategy. syncs up

Andrew Ahlborn

And terms $XX with earn out terms in roughly then in of $XX of million some in income time. components million sheet, pre-tax roughly there. with from net And ‘XX balance equity in of over expectation the plant growth

Tim Hayes

Okay. again, I Adam there. going comments Andrew. Thanks it the I'm and there, appreciate guys. to leave

Operator

Our next Please sir. is question Stephen with Raymond ahead Laws your go with James. question from

Stephen Laws

earlier morning. Andrew income. good Hi, the on an follow fee up question Triple

costs I the think balance line. I'm $XX deferred that we how runs there guess of net million bottom think expect I drops four of that to four about years; or off to sheet Is two we any to quarters. over out that two much sorry that how do

Andrew Ahlborn

ancillary will minimal. majority drop there'll period pretty over line. are embedded that processing produce costs but discount With to said, variable and that that The loans being have to the the forgiveness upfront of captured the been The PPP related ready. to some costs bottom Yes. in be

Stephen Laws

margins looks experienced it the more high wanted the like end I appreciate very and them deck to seen ask XX the at but in to what quarter, banking margins, and for on color So residential that. prepared those corresponded most a little have leveled I XXX quarter but you I largely where for expect which you give wondering you some of the ones kind and margins you July? of color pressure wholesale, versus guys remarks, retail be off there. at around the in could said flat, think if

Tom Capasse

to want you touch on Andrew, that?

Andrew Ahlborn

month last of trends much the over When at channels, pronounced. compression correspondent the has and been certainly. Yes, you look sort our in wholesale more the

basis retail and XX basis points channels. other So in in to at more around you're seeing XXX margins compared like points quarter channels something the those

similar fairly going that forward. expect would I So,

Stephen Laws

it expenses will then And to appropriately do into intend manage is do take along Great. guys everything refi out of care or business really you think itself. slowing how look a variable so or line, environment, you you that there, you're staffed as

Tom Capasse

XXXX being they've GMFS; the been significant cost of and rank through it and as or terms is they reliance outsourced in way of quartile since loan Yes. best OpEx and in closures. a they per this terms the do top doing on qualified underwriters lowest

relatively purchase variable we for a So stability and other think with than I cycle. the obviously structure earnings provides higher higher have bit little rate retail a across percentage, cost which a more lenders

Stephen Laws

Appreciate the your time comments as for Thanks there. well.

Operator

question Our ahead. Riley. Matthew go from the Please with is Howlett next B

Matthew Howlett

margins I net my that taking Hey, question. want good gains Thanks the I on moving to few margin, and grew multifamily be morning about XX% margins above the million you the although on for interest was like on Freddie premiums said are growing levels focus SBA guys. historical the income is the in up is know the Is longer they quarters. think on just averages. $XXX term? and net over we sale do How going those was running to balance the normalized next sustainability the sheet of

Tom Capasse

to the certainly Historically, Yes, run XX% space. have in they XA XX%.

little So are a elevated. there

in XA servicing build as the thing we will I other of add, you earnings an sell is percentage profile look to at lower a higher started have production strip. at to premiums the forward effort our Now going some

closer general, all we've a XX% to premium, look a in servicing in norm the So when for of decided higher sell to historical strip. portion results the assets ahead that you which or

Mac on to space. point the sale income in been around They've there time. quite basis servicing Freddie So that for mark running and then there due is XXX excess the right no gain

little the a quarter higher normalized. maybe in but bit So pretty

Matthew Howlett

retention strip. saying give is you're some SBA So on from the this of you higher servicing of quarter gain the up the what

Tom Capasse

third Starting in the quarter.

Matthew Howlett

earnings it, of Starting segment grows. will effectively that the okay. that more out on as those its quarter. spread third Does Got

Tom Capasse

strip. increase will size of servicing the duration and It the the

Matthew Howlett

Got it.

Okay, good.

income some how and you and and What in shareholders. in of excess and be coming investments. PPE about to to the made going stock the six looks buying you will mean I of then the terms sort boost quarters. of return to go over investments company raising in allocate that you four it like how Okay you making with earnings back or acquisitions you're dividend, have or Can these least how allocated next can can tell the of at outlined you earnings think you us terms sort of technology. the the

Tom Capasse

want it. Andrew touch to on you

Andrew Ahlborn

first be that as quarter. Well dividend. did PPP PPP as So standard will part is though the that What said of in of Board I has of sort the The say income. recognition considered we normalized outline TRS entities. our income

would distribution of time how So of in the earnings at upon dependent income which up some end the TRS the compares I those the year, depending the of taxable appreciation need of the taxable But as year, a strategy to special PPP a our income Board forward. retain for on of dividends those of revenue had and part really the a there book the income net is value over so there is say from at streams, stable the highly going end of to dividend. paid, sort be form may considering our is dividend ability

Tom Capasse

flexibilities financial the of structure Andrew to as add what one is a And Yes. saying business our to model, of origination. our just

We higher or and dividend. value grow since that take case, either, that we increasing the and at shares, trading Andrew we because would book ability have in retain be at as capital we've the back book excess not accretive. we're on this the unlikely buy said to have It's TRS look

Matthew Howlett

Got you.

these acquisitions, pipeline update an of bolt-on other in there you're a And some type is acquisitions. I bolt-on and that still terms acquisitions are anything to look mentioned you Redstone on few of you these but programs of or know looking the at, at

Tom Capasse

Yes, the stress we're the in SBC a whole of in opportunities number base. continuing to look at squarely

Some long least to of housing is along we the for single pathway into, digit pretty market European in and and the right now that a think migration example, it there hot could HPI is at be it US a select is, market.

we're the lot loan the looking in aspects and the the done UK. So housing by of at that transactions we've construction in as Texas commercial evidenced

Matthew Howlett

Thanks it, Got interesting. that's guys. a lot

Operator

is ahead. Our Rahmani with from next question Please Jade KBW. go

Unidentified Analyst

of you do is sustainable expect Jade. [ph] EPS back in is current levels, first we question distributable a view 'XX? should at ‘XX moderation or this the in Sarah Hi, and half for My

Tom Capasse

you from quarter. I includes pretty our earnings that reduction our look pre-COVID profile you What sector. substantial a producing the income levels norms. see is as core at business And the think residential in is at current

the quarter looks add to $XX what And profile through and an us on of so four over give And that of when it take income you like. those that need levels period. PPP idea two you earnings flow to plus million

Unidentified Analyst

XX-day with second Thank credit the quarter question two my did you. and on update last or in And is, please are non-accrual percentage could how provide an loans you and implant? what percentage that credit, what portfolio compare of

Adam Zausmer

healthy expired the in XX% Hi, On feel seeing trends Certainly delinquencies CRE plus performance under X% this a forbearance portfolio forbearances of pre-pandemic. remain the versus X% is We of environment. X% across about than XX a current. delinquencies self less is target portfolio XX-days today. XX-day stabilization this X.X% Adam. portfolio, is

We Ready portfolio including versus the XX-plus non-accruals that's that consecutive X% last twice forbearance. months delinquency CMBS today, X%. for continue The X.X% Andrew comparison in for that's, our then is upgrade levels on risk what of quarter. the Capital better correct loans And at to three have around scores CRE performing post about conduit

remains performance our date loss healthy, zero the experience portfolio through pandemic. So to and extremely has

Unidentified Analyst

great. taking for That's Thanks question. my

Operator

you. Thank

Our next go Please Muller question from ahead. JMP Securities. Chris with is

Chris Muller

Hey guys, thanks for question. the taking

one Just me. quick a from

about Can higher expect was from quarters the you volumes just So that do or there but you shift the to it the that pretty like two a origination you in last loans. the shift transitional originate of you dropping was still it market over talk to a then on looks little the guys bit quarterly to deliberate and guess I that, pipelines where that normalize rate strong. demand came a

Tom Capasse

in who legs of to the production to waste on that a CapEx to overall deferred there like has due into refer sponsors we're property. were multifamily on I'll seeing, but COVID planned heavily the they workforce think as Bridge we increases demand what the CapEx for do there the have involved Bridge or to side, the electing basically market Adam, product, XXXX minor permanent upgrade as is COVID any financing which have spend you instead far vacancy that's the is definitely to that effect and and going Yes. to early the do

is seeing higher terms with would sponsors there. volume that Adam, but there with selling on comment plus the the what weak transaction you that of strong is in sponsor there we're pipeline, what So

Adam Zausmer

our activity credit of confidence platform, in business Yes, tremendous focus I perspective high a from Tom on mean plans. still clean certainly Bridge from seeing the of with degree the deals

really Tom due strategy of environment credit to has selectively industrial larger the up, the spot executing limited cash the with multifamily flowing been sweet This see balance markets is as portfolio is in Our story. you mentioned mostly our stress debt. and attractive good average going

selectively executing we're So larger multifamily loans.

that about We again the CLO in portfolio that to class the be multifamily this environment. like plus are an XX% market we the of that in with in space asset continues especially is now

Chris Muller

congrats And thanks. another quarter. on Great, strong

Operator

speakers, this the I'll your call And we to you closing back time. no have return further for at questions remarks.

Tom Capasse

appreciate We look and again next time quarter's for quarter forward call. your the to this

Operator

everyone. Have that conference We great day, you conclude a ask the participation that kindly your and for does today. lines. thank And please call all for you your disconnect